Thermo Fisher's $3.1B Acquisition of Olink: Accelerating Innovation in Proteomics Through Complementary Platforms

Recently, Thermo Fisher Scientific and proteomics giant Olink simultaneously announced that their respective boards have approved Thermo Fisher’s proposal to acquire Olink for $26.00 in cash per ordinary share, equivalent to $26.00 in cash per American Depositary Share (ADS), drawing significant attention from the industry.

Two key points: one is the impact of the strong alliance on the development of proteomics, and the other is the premium acquisition exceeding 74%.Thermo Fisher Scientific Inc. will begin acquiring all issued and outstanding ordinary shares of Olink Holding AB and all American Depositary Shares. The transaction values Olink at approximately $3.1 billion, including about $143 million in net cash.

Olink, a leader in the field, is dedicated to breaking through the comprehensive bottlenecks of protein detection in "multiplexing capability/specificity," "sensitivity," and "detection throughput" to assist in the discovery of protein biomarkers, drug development, and translational medicine. Its main technology isPEA (Proximity Extension Assay), providing high-throughput protein analysis for the large number of qPCR and next-generation sequencing readout systems installed in the market. With a library of over 5,300 verified protein biomarker targets, Olink has also validated a series of panels that can precisely detect 15 to 5,300 biomarkers in 1-6µl of body fluid. Covering 100% of major signaling pathways, it achieves biologically meaningful ultra-sensitive unbiased targeted proteomics, especially for samples such as plasma and serum that traditional methods have failed to address.

Undoubtedly, Thermo Fisher Scientific has its eyes on these revolutionary breakthroughs. Its own business covers life science instruments/reagents used for scientific research, including sequencers, PCR systems, and culture media; analytical instruments such as chromatography, mass spectrometry, and electron microscopy; clinical diagnostic products; as well as various consumables, reactors, and research services. The aim of this acquisition is to...Its leading mass spectrometryComplementing the Helix Life Sciences platform can help accelerate discoveries and scientific breakthroughs.

According to the 2022 financial report, Olink's revenue reached 139.8 million U.S. dollars, with a growth rate as high as 47%. Based on this acquisition, it is predicted that after the acquisition, revenue will exceed 200 million U.S. dollars in 2024, with growth reaching about 15%. In the first full year of the acquisition, the transaction is expected to dilute the adjusted earnings per share by 0.17 U.S. dollars. These revenue figures present a favorable outlook, but the most important aspect still lies in the synergy of operations.

Over the past five years, Olink has grown from $46 million in 2019 to $140 million in 2022, with expectations of nearly $200 million this year. However, Olink's gross margin is not high, still lagging behind Illumina (approximately 70%) and 10x Genomics (80%). The company needs to shift to a "razor and blades" model to improve profitability, as well as expand its product scale to achieve growth.

Even so, relying solely on the analysis service model and products cannot maintain its leading position in the market in the long term.Because they are in the innovative technology track, where there is always the possibility of being disrupted or surpassed, it is not stable. Relying solely on key technologies to capture the market is insufficient, necessitating more collaborations. By partnering with basic research, drug development, and clinical research, continuously developing new protein biomarker solutions, accelerating biological insights, and valuing collaborations with the scientific community, such as the UK Biobank PPP (UKB-PPP), enhancing the understanding of underlying disease mechanisms, and expediting the development of therapeutic drugs.

Besides, commercial activities such as mergers and acquisitions are also a crucial part.. For example, it was acquired by Summa Equity in 2019, received cash flow from research and services during its first fundraising in 2021, extended to plants and algae through the acquisition of Agrisera in 2020, and is now being integrated into Thermo Fisher Scientific. Undoubtedly,With the help of Thermo Fisher Scientific's global influence, Olink's business can be significantly expanded and its penetration into various fields worldwide can be promoted., which is a definitive benefit for sustained revenue growth.

Let's start directly from the intersection point of this collaboration,Mass spectrometry has always been an important support for the development of proteomics,Since the launch of its first Orbitrap high-resolution accurate mass spectrometer in 2005, Thermo Fisher Scientific has continuously improved its resolution, sensitivity, specificity, and speed. Particularly in June this year, Thermo Fisher Scientific introduced the Orbitrap Astral mass spectrometer, a complete upgrade that represents the pinnacle of technology. It offers an unparalleled combination of sensitivity, dynamic range, speed, and precise quantification.

However, mass spectrometry and PEA are, after all, two different proteomics implementation pathways. Thermo Fisher Scientific does not intend to pit them against each other but instead allow both to develop individually after the acquisition. Olink will become part of Thermo Fisher's Life Sciences Solutions segment, which includes PCR machines, sequencers, and more, while the Orbitrap mass spectrometer remains in a separate analytical instruments division.Leverage their respective strengths, fully develop, learn from each other, and achieve healthy competition.

In addition, in recent years, the biotechnology customers served by Thermo Fisher Scientific have experienced weak demand for life science products due to a shortage of funds. To proactively address this issue,The acquisition of Olink, a heavyweight technology complementary stock, to accelerate protein discovery and detection, also appears urgent.. It helps to increase the rate of drug discovery, and the discovery and detection of proteins as key markers for various diseases naturally contribute to drug discovery and development. Overall, building on the existing advantages of mass spectrometry and introducing the PEA technology platform with a different perspective, full competition will benefit the development of proteomics.

With Olink's technical沉淀, the number of biopharmaceutical companies and academic institutions has exceeded 850. As of August 2023, the number of articles published citing PEA technology has surpassed 1,363. Clear scientific utility continues to drive rapid customer adoption and growth. In fact, proteins are more relevant than DNA but also more complex, with issues such as sensitivity, specificity, dynamic range, throughput, precision, and reproducibility. Therefore, it is quite an achievement for Olink to have reached this level, which is also one of the reasons it has become an international leader.

Based on this, Olink claims to have a complete product range covering the entire spectrum from the broadest high-complexity discovery to more targeted mid-complexity research, and then to late-stage low-complexity clinical trials and diagnostics, representing a potential market opportunity of $35 billion. Combined with its leading specificity, high dynamic range, and sensitivity, it delivers strong performance in proteomics research.This claim of breaking the deadlock carries significant weight and a high degree of authenticity, which might also be what Thermo Fisher Scientific values.

Whether by expanding proteomics through its own mass spectrometry or by introducing Olink, this move is a hundred benefits with no harm to Thermo Fisher Scientific, except for the only downside: this premium acquisition might slow down the return on investment.

Under the strong alliance, Thermo Fisher Scientific, building on its Orbitrap mass spectrometry platform, now possesses PEA through the acquisition of Olink. With these two王牌 (王牌 refers to trump cards or key strengths), the company naturally has greater confidence in proteomics.

As the next scientific frontier, it is more relevant than DNA, as mentioned above, which means it has broader prospects in the future. At the same time, it faces greater difficulties and challenges, such as sensitivity, specificity, dynamic range, throughput, accuracy, and reproducibility, all of which need to be overcome and upgraded one by one.

Genomics is still struggling, let alone proteomics. In any case, the cooperation between these two giants in the history of proteomics development has injected a strong catalyst into the progress of this field.

References:

1. Fiscal Year Revenue of $139.8 Million: How Did Global Proteomics Giant Olink Achieve a 47% Revenue Growth Rate?, Artery New Medicine, 2023

2. Thermo Fisher Scientific Spends $3.1 Billion to Acquire Proteomics Giant Olink, Cell Gene Research Circle, 2023

3.Proteomics Frontier: Thermo Fisher Scientific Acquires Olink, Complementary Technologies Drive Growth, I Am the Builder, 2023

4.Proteomics: Deciphering Biological Transcription Codes, Huge Market Potential, Life Science Industry Observation, 2023